Accounting -Chapter 1
Limited Liability Company
A business form consisting of one or more persons or entities filing an operating agreement with a state To conduct business with limited liability to the owners, yet treated as a partnership for tax purposes
Corporation
A business organized under state or federal status as a separate legal entity
Proprietorship
A business owned by one person
Service Business
A business providing services rather than products to customers
Account Receivable
A claim against the customer created by selling merchandise or services on credit
Ratio Of Liabilities to owner's (stockholders') equity
A comprehensive leverage ratio that measures the relationship to the claims of creditors to stockholder's equity
Cost Concept
A concept of Accounting that determines the amount initially entered into the accounting records for purchase
Business Entity Concept
A concept of Accounting that limits the economic data in the accounting system to data related directly to the activities of the business
Matching concept
A concept of accounting in which expenses are matched with the revenue generated during a period by those expenses
Unit of measure concept
A concept of accounting requiring that economic data be recorded in dollars
Objectivity Concept
A concept of accounting that requires accounting records and the data reported in financial statements to be based on objectives evidence
Balance sheet
A list of the assets, liabilities and owner's equity as of a specific date, usually as the dose of the last day of the month or a year
Statement Of cash flows
A summary of the cash receipts and cash payments for a specific period of time such as a month or a year
Statement of Owner's Equity
A summary of the changes in owners equity that have occurred during a specific period of time
Manufacturing Business
A type of business that changes basic inputs into products that are sold to individual customers
Merchandising business
A type of business that purchase products from other businesses and sells them to customers
securities and exchange commission
An agency of the U.S government that has authority over the accounting and financial disclosures for companies whose shares of ownership (stock) are sold and traded to the public
Business transaction
An economic event Or condition that directly changes an entity's financial condition or directly Affects its results of operations
Accounting
An information system that provides ueports to stakeholders about the economic activities and condition of a business
Business
An organization in which basic resources (inputs) such as materials and labor, are assembled and Processed to provide goods or services (outputs) to customers
Partnership
An unincorporated business form consisting Of two or more persons conducting business as co-owners for profits
Accounting Equation
Assets = Liabilities + Owners Equity
Expenses
Assets used up or services consumed in the Process of generating revenues
Revenue
Increases an owner's equity as a result of selling services or products to customers
Prepaid Expense
Items such as supplies that will be used in the businessin the future
Rent revenue
Money received for rent
Ethics
Moral principles that guide the conduct of individuals
Certified Public Accountant
Public Accountants who have met a state's education, experience, and examination requirements
Fees Earned
Revenue from providing services
Net loss
The amount by which expenses exceed revenue
Earnings
The amount by which revenues exceed expenses
Net Income (net profit)
The amount by which revenues exceed expenses
Financial Accounting Standards Board
The authoritative body that has the primary responsibility for developing accounting principles
Financial Accounting
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a parodic preparation of various statements from such records
Management (Managerial) accounting
The branch of accounting that uses both historical and estimated data win providing information that management uses in conducting daily operations an planing future operations and win developing overall business starategies
Profit
The difference between the amounts received from the customers for goods or services provided and the amounts paid for the inputs Used to provide the goods or services
Public Accounting
The field of accounting where accountants and their staff provide services on a fce basis
Account Payable
The liability created by a purchase on account
Assets
The resources owned by a business
Liabilities
The rights of creditors that represent debts of the business
Sales
The total amount charged customers for merchandise sold, including cash sales and sales on account
Private Accounting
the field of accounting whereby accountants are employed by a business firm or a not-for-profit organization
Account Form
the form of balance sheet that resembles the basic format of the accounting equation,with assets on the left side and liabilities and Owners equity on the right side